Baku, Azerbaijan, Dec.22
By Leman Zeynalova – Trend:
Tax reforms in the US will pave way for increase of shale production in the country and this is definitely remains a concern, Abhishek Despande, J.P. Morgan senior oil strategist believes.
He told CNBC that US will increase drilling activity in 2018 and going forward, which for sure again is going to help increase the US shale production growth.
“But this US shale oil production growth is a very binary equation on one hand and it is price-dependent at the same time. Strong prices have already incentivized producers to increase production and will potentially bring extra oil next year,” added Despande.
Tax reforms will additionally help producers to increase their plans for 2018 and this is definitely remains a concern, the oil strategist believes.
US shale supply will remain key risk given its binary relation to oil prices, according to JP Morgan.
The bank’s forecasts for Brent and West Texas Intermediate (WTI) oil prices for 2018 is $60 per barrel and $54.9 per barrel respectively.
Earlier, the the US Senate approved the $1.5 trillion tax bill, which includes permanent tax breaks for corporations and temporary tax cuts for individuals, by a final vote of 51-48.
The bill lowers the top individual tax rate from 39.6 percent to 37 percent and slashes the corporate tax rate to 21 percent, a dramatic fall from its current rate of 35 percent.
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